Ophir nears Fortuna FID, cuts workforce by 15%

Ophir Energy is expecting to have the Fortuna FLNG project final investment decision (FID) off Equatorial Guinea settled in the coming months, as the company moves to decrease costs by cutting 15% of its global workforce.

Thailand operations. Image from Ophir.

“We have taken certain difficult but necessary decisions to further reduce our cost base. This is now right-sized to maximize the value of our core assets in the period before the Fortuna FLNG Project is onstream,” says Nick Cooper, Ophir CEO. “We are closing in on the Fortuna Project FID which will start the monetization of a substantial portion of Ophir’s resource base.”

Ophir expects the Fortuna FLNG project’s FID to be achieved in 2H 2017, however, it is dependent on multiple stakeholders.

Two outstanding items prior to FID include awarding the offtake deal, and the closing out of the project debt facility.

“Once the offtake decision and debt facility have been agreed, the board of Ophir will be in the position to take the FID, which will also be subject to approval by Ophir’s shareholders and the President of Equatorial Guinea,” says Ophir.

Through cost saving methods, Ophir anticipates to support the drilling of two to three wildcats per year, once Fortuna is onstream in 2020.

The company is prioritizing the Fortuna FLNG project, in addition to the expansion of Ophir’s Asian producing assets, which includes Bualuang off Thailand. To do this, Ophir’s board has moved to further reduce its underlying cost base due to limited signs of an oil price recovery, and low exploration activity.

Ophir is reducing corporate roles in its London office, including the stepping down of Chief Operating Officer Bill Higgs, and expatriate positions that will be cut by approximately 50%, which equals to about 15% of its global workforce.

“These actions are estimated to result in annual cost savings of US$10-12 million (after one-off restructuring costs of $7 million),” says Ophir. “The company will, nevertheless, retain all competencies essential to the delivery of its core projects, including the remaining workstreams required to secure the FID of Fortuna, to undertake the expansion of the Asian production base and to operate Ophir’s exploration portfolio.”